Steep growth in transaction fees and mortgage lending have propelled ASX-listed Kina Bank to a 15 per cent leap in interim profit.
Papua New Guinea’s second largest bank reported a net profit of K45.5 million (A$ 18.7 million) in the six months to the end of June – an improvement of K15.85 million on the corresponding period last year.
Kina Bank is now pursuing an expansion strategy focused on organic growth following a decision last September by PNG’s competition regulator to block a planned purchase of Westpac’s banking business in the country.
Kina is PNG’s second largest bank on measures of deposits and assets behind the Bank South Pacific (BSP).
However, Kina’s fat interest margin – currently running in excess of 6 per cent - could come under threat in the near future from a foreign buyer of Westpac’s business.
Bank of China is seen as a prospective acquirer of Westpac’s PNG operation.
The Chinese banking giant now has an on-the-ground presence in Port Moresby after opening a representative office in July.
Kina Bank chief executive Greg Pawson said his company was seeking to leverage digital platforms to deepen market share in PNG.
“Over the past six months we have continued to build out our organic growth strategy,” he said.
“Increasing market share in our targeted segments remains the focus for 2022 supported by a robust balance sheet that ensures profitable growth.
“Underpinning revenue momentum is a disciplined approach to deliver customer-led digital solutions.
“The launch of our ‘Single View’ service is a market first in PNG – it enables customers to access their superannuation balances via Kina’s online banking channel.”
While Kina’s bottom line was fattened by the big net interest margin, the bank is also driving profitability through the introduction of new fees.
Kina boosted its net fee and commission income by an eye-watering 35 per cent in the June half.
Net fee income rose K14 million to K54 million.
Most of the increase was attributable to the imposition of digital banking fees, which ballooned more than 95 per cent.
ATM and other transaction fees almost doubled, as well.
While Pawson tries to position Kina as PNG’s leading online bank over the next 12 months, he will do so with a markedly different management team.
The bank has suffered two departures from its senior management team this year.
Long-serving chief financial officer Chetan Chopra is due to leave the bank this week and has been replaced by former Bank South Pacific executive, Johnson Kalo.
In early August Kina Bank appointed former Nigerian banking executive Sachin Samant as the company’s new chief information officer.
Kina’s directors declared an unfranked interim dividend of 4.1 cents per share for the company’s Australian shareholders.
The dividend will be paid on 4 October.
The bank’s ASX-listed scrip closed down 2 cents to 90 cents.